Editor's note: This is the last of four articles looking at position papers Xcel Energy has issued in response to Boulder's analysis of the feasibility of forming a municipal energy utility to incorporate more renewable energy. This article deals with issues related to energy efficiency programs. Previous articles dealt with the carbon tax, wind power and financing.

Boulder has more than tripled the amount of money it plans to set aside for energy efficiency programs and solar rebates in response to criticisms that a municipal utility would not offer the same level of benefits as Xcel Energy.

In a position paper critiquing Boulder's case for municipalization, Xcel Energy drew attention to a city plan to spend roughly $2.2 million a year on energy-efficiency programs, while the investor-owned utility spent, on average, more than $5 million a year in the Boulder market from 2006 to 2012 and spent as much as $10 million in some years.

"Boulder's proposed energy programs for customers have no apparent budget to replace Xcel Energy's solar, or demand response programs, and its proposed investment in energy efficiency and other green programs do not measure up to Xcel Energy's current programs," the paper says.

The paper is one of several that Xcel has issued as the city nears a decision on whether to begin condemnation proceedings against the energy company. The Camera has looked at the arguments in the papers over the course of this week.

The Boulder City Council is scheduled to discuss municipalization at a study session on Tuesday and take an initial vote on whether to begin condemnation proceedings to obtain Xcel's distribution system at a special meeting on Wednesday.

The city plans to release updated modeling this week in advance of the study session, and that modeling will include a substantially larger commitment to energy efficiency programs and solar rebates.

"This is an area where the feedback we have received from Xcel has been incredibly valuable and we've adjusted our modeling," Boulder spokeswoman Sarah Huntley said. "We always intended to at least match, if not exceed, Xcel in this area, but we were attempting to derive from public records and with no help from Xcel in determining how much money was coming into the Boulder market."

The new plan calls for a future city utility to spend $3 million a year on incentives to reduce energy use and $3.5 million a year on solar rebates, and for those amounts to increase along with inflation.

That spending would be under plans that do not move aggressively to increase local power generation, Huntley said. Boulder officials have said they anticipate a municipal utility would eventually include more local generation, but they haven't included those scenarios in the modeling because they are harder to predict.

Boulder also has said it will buy out existing solar contracts with Xcel Energy and make both the energy company and customers whole. How much that will cost would be determined when Boulder acquires Xcel's system, and the money for it would be part of the acquisition budget, Huntley said.

Boulder also anticipates phasing out the Climate Action Plan tax, or carbon tax, which voters renewed for another five years in 2012, in the event the city forms an electric utility.

'Hard for them to offer that'

Xcel CEO David Eves said it may be hard for a Boulder power utility to hold to those commitments if its other forecasts are off.

"I think it will be really hard for them to offer that as a small utility," he said. "One of the reasons we are able to do this is because we have expertise and resources across three states."

In the position paper, Xcel says it has 80 employees working on demand-side management and solar programs, compared to five that the city anticipates employing. Boulder customers have participated at higher numbers in Xcel's programs and reaped larger benefits, Xcel says in the paper.

Eves said the company continues to increase its investment in these programs, though improving baseline standards due to new building codes and federal regulations may mean some of the programs won't make as much financial sense in the future.

'We would have more flexibility'

A Boulder utility would be able to offer new incentive programs, such as "on-bill" financing for upgrades and money to help businesses train employees in how to operate new systems, Huntley said. The city has heard from some small- and medium-sized businesses that they put off improvements in spite of the existence of rebates because they don't have money for training.

"As a regulated utility, Xcel can't just say this seems like a good incentive, let's do it," she said. "They have to fit it into a very complicated formula before the PUC and show that it doesn't affect ratepayers. As a municipal utility, we would have more flexibility."

Eves said those regulations protects customers.

"Those complicated rules are really cost-effectiveness tests to make sure we're not paying too much for a rebate and ensuring they create more value for the system than it costs ratepayers today," he said.

Huntley said Boulder would still evaluate all of its incentive programs before implementing them.

The culture of Boulder means customers would demand energy incentives, but it also makes business sense for the utility to be generous with rebates, she said.

"This is a community that has said to its government, 'We want to participate in these programs, and we want local government to make it feasible,'" she said. "That's the culture in which we're operating. We also believe these programs are essential from a financial perspective. The biggest cost to any utility is the power you need to buy. The least expensive power is the power you don't have to buy.

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